Cookies on Pinsent Masons website

This website uses cookies to allow us to see how the site is used. The cookies cannot identify you. If you continue to use this site we will assume that you are happy with this

If you want to use the sites without cookies or would like to know more, you can do that here.

Peers, planners, house builders and council representatives demonstrate unease over starter homes proposals

Proposed UK government policies on the provision of starter homes at a temporary 20% discount from market value were criticised by representatives of the planning profession, councils and house builders at a meeting of the Communities and Local Government (CLG) Committee last week.16 Feb 2016

Certain of the concerns raised at the meeting are shared by members of the House of Lords, as reflected in proposed amendments to the Housing and Planning Bill.

At an oral evidence session of the CLG Committee on 8 February, concerns were raised that allowing those benefiting from a 20% discount on starter homes to sell them at full market value after five years might result in speculative purchase with a view to making profits and cause difficulty in meeting the need for 'truly affordable' housing.

Martin Tett, vice-chair of local government representative body the Local Government Association, suggested that any discount should remain in perpetuity, or "a compromise of a substantial period of time, possibly 10 or 20 years, so that you can block out speculators who are effectively buying it cheaply to sell it on in five years". Tett also said it was important that local councils were allowed to offer a suitable mix of affordable housing products to suit the specific needs in their areas.

National Housing Federation head of policy Rachel Fisher agreed with Tett that more detail was required from the government in order to assess the likely impact of starter homes policies but said "we would be very concerned if the change to the definition of affordable housing [to include starter homes] meant that you would actually get less truly affordable housing in perpetuity back".

Chief executive of the Campaign to Protect Rural England, Shaun Spiers said his campaign group was concerned about the potential impact of starter homes policy on rural areas. Spiers said it was "really, really important" that affordable housing was provided in perpetuity and stressed that starter homes "will not be affordable to most people on average, let alone low, rural wages". Spiers said there was "a real need for social housing for people who work locally or have local connections", which would not be met by starter homes that could be sold "as second or holiday homes after five years".

Kate Henderson, chief executive of the Town and Country Planning Association suggested to the Committee that "what is affordable does need to be based on income, not market price" and that as proposed, starter homes policies were "a bit out of kilter with what affordable actually means".

The Royal Town Planning Institute's head of policy, Richard Blyth said the government's approach seemed to be "that anything that would get in the way of starter homes being provided should be swept away".  Blyth agreed with Spiers that the policies might impact on the provision of "genuinely affordable social housing" at rural exception sites and said the Institute was "quite concerned" about starter homes "displacing some important uses".

Amendments submitted for discussion by the Housing and Planning Committee in the House of Lords suggested peers shared certain of the concerns raised at the CLG Committee meeting.

Changes submitted by Labour peers Lord Kennedy of Southwark and Lord Beecham would cap the price of a starter home at "no higher than is affordable to a household receiving the median local household income"; restrict starter homes to "under-used or unviable brownfield sites not currently identified for housing"; and prevent them from being sold to buy-to-let investors.

Lords Kennedy and Beecham and Labour peer Baroness Bakewell of Hardington Mandeville proposed changes that would ensure that any discount applied to the price of starter homes remained in perpetuity rather than for five years.

Lords Kennedy and Beecham said they would entirely oppose a new power for the communities secretary to declare specific local development policies incompatible with the delivery of starter homes and to direct that no regard should be given to them.

Several peers submitted amendments that would introduce exemptions from starter homes requirements at certain types of sites or prevent starter homes being required at the expense of other forms of social or affordable housing and Lords Kennedy and Beecham proposed to restrict availability of starter homes only to those living or working in the local area.

Planning expert Matthew Fox of Pinsent Masons, the law firm behind Out-Law.com, said: "These debates at committee stages in both houses demonstrate the importance that getting this legislation right will have in improving the supply of housing that is truly affordable. It is clear that stakeholders from all sides of the industry appreciate the need for sustainable housing and sites with a proper mix of housing that meets all requirements; and it will be interesting to see if the government listens, given its commitment to starter homes as its ‘big idea’ for affordable housing."

"With the pressure on LPAs to deliver local plans ramping up with proposals such as the removal of the New Homes Bonus, it is particularly interesting to note the proposal that local plan policies could be disregarded if they are incompatible with starter home delivery," said Fox. "If councils are seeking to develop ‘local’ plans that still provide affordable housing, will this policy delay its actual delivery, whilst LPAs wait to see the final detail of starter home policy?"

The next sitting of the Housing and Planning Bill Committee is scheduled for 1 March.